China Approves $3.7 Billion Loan to Pakistan, Strategic Blow to U.S.

Islamabad: After military confrontation with India, China has become kind to Pakistan. After arms, China is now opening treasury for Pakistan. Beijing has assured to give Pakistan a commercial loan of 3.7 billion dollars before the end of June. This includes the amount of 2.4 billion dollars maturing next month. This loan will be made available to Pakistan in Chinese currency. China has made a move against America by giving loan to Pakistan in Chinese currency Yuan instead of dollar. This is part of the Chinese campaign to separate the dollar from the economy.

China assures Pakistan

Pakistani media outlet Express Tribune quoted government sources as saying that China has given this assurance during recent meetings aimed at securing the refinancing of loans maturing between March and June 2025. Officials said Pakistan has already repaid a $1.3 billion loan to the Industrial and Commercial Bank of China (ISBC) in three installments between March and April this year.

Increase in Pakistan's currency reserves

This month, the International Monetary Fund (IMF) approved a $1 billion loan, after which Pakistan's central bank reserves stood at $11.4 billion. After Chinese finance, it could increase to $12.7 billion. The report said that a loan of $2.1 billion or 15 billion Chinese yuan of three commercial banks is being completed in June. Sources have said that China is extending this loan for three years.

Why is China's loan important?

Timely refinancing of the Chinese debt was necessary for Pakistan to maintain its reserves in double digits by the end of June. If China does not provide relief, Pakistan's reserves will fall below $10 billion. Under the International Monetary Fund (IMF) program, Pakistan has committed to take its reserves to around $14 billion this fiscal year.